Healthcare Pricing is More Proof that Transparency Isn’t Enough

New Orleans It is amazing that big companies and governments continually believe, despite the outrageous costs involved, that simply creating apps and information packed websites will change the public’s ability to make choices and decisions. Criminals and scammers fully know the tricks of the predatory trade are such that information is unable to immunize the public, and for some companies this is a business model as well. Payday lenders and tax preparers in negotiations with ACORN were always more than willing to be totally transparent about excessive interest rates and charges, because they knew full well the customer sitting across the desk from them is desperate for the money, and is more than willing to pay whatever it takes to get it. Healthcare is usually the same.

Healthcare policy makers, providers, and insurers in this critical, multi-zillion dollar industry are now expressing surprise as they find out that all of assumptions about the value of their apps, website data dumps, and comparisons of pricing on drugs and quality of healthcare services are not lowering costs or modifying consumer behavior. Once again, similar to payday lending and other predatory schemes, the providers and the industry are trying to ignore the desperation and powerlessness of the consumer by pretending she is a free agent of some sort, rather than a victim. They are also ignoring increasingly well settled economic understanding that people are not rational economic agents, especially when it comes to change and their reliance on trusted intermediaries, like their usual doctors and hospitals. Looking at this mess, we almost want to say, if you are so rich, why aren’t you smarter?

The New York Times reported on the failure of many of these tools. Of course the rule continues to be, despite the actions of many states, that hospitals and healthcare professionals are hiding information about the comparative value of their services and the pricing in the market. But, even where efforts by some companies and insurers to offer price and value comparisons, people aren’t using them. Researchers compared the decisions of 300,000 workers who didn’t have access to a website cost calculator with 150,000 that did and found that only 10% used the site the first year and 20% the second year, and that it didn’t reduce outpatient spending. Aetna offers a price transparency tool but only 3.5% of its commercial market participants use it. A similar price tool in New Hampshire is used by only 1% of residents. Robert Wood Johnson did a 10-year study and found that doctor quality comparisons had only a “modest effect on the awareness and use of the information.” Duh.

Let’s skip the digital divide and the millions of lower income families without access to any of this information, and get right to the point of how difficult it is to either find this information most places or understand it. Why isn’t there a recognition that we need ubiquitous healthcare advocates, navigators, sherpas, assistants, or whatever we might want to call them? During the Affordable Care enrollment in Texas for example families who had never had insurance were asked to choose between more than 35 plans, each with multiple permutations, without our navigators, who were forbidden to offer any advice to these novice healthcare customers. Who would be surprised if decisions defaulted to nothing or self-interested agents and professionals?

Of course some of the industry believes that education can only be administered by the blunt instrument of punitively making people pay the cost of decisions they were unable to make well without assistance by adding consumer pain to their delusion. Others advocate outreach, and, eureka, finally someone gets it. People need help with all of this to offset the predation, whether it’s door-to-door or through ubiquitous health care centers and advisory facilities so that they can get the information in a user-friendly way with full explanations from someone committed to their best interests. Furthermore, the cost for funding such outreach and facilitation would be minuscule compared to the daily explosion of health related costs that are based simply on the principle of the buyer beware and keeping suckers born and nurtured by the system every minute.

If we really want to make change and lower costs, people need to help people, not websites, applications, and fancy tools.